CMS Proposes Sweeping Cuts to Hospital Administrative Requirements: What Providers Should Know

On November 5, CMS proposed one of the broadest deregulatory packages providers have seen in years. The proposed rule, “Cutting Administrative Requirements for Excellence in Patient Care,” would remove or revise Medicare Conditions of Participation and related requirements the agency calls obsolete, outdated, or excessively burdensome.

What is in the proposal:

• Obstetrical services: CMS would eliminate certain staff training and quality assessment/performance improvement (QAPI) requirements in the obstetrical CoPs, while adding new patient-rights requirements for birth tissue collection, including informed consent standards and support for families requesting birth tissue for cultural, religious, or personal reasons.
• Critical access hospitals: distance eligibility determinations would be based on proximity to hospitals providing acute inpatient care (or another CAH), not specialty-only facilities such as psychiatric or long-term acute care hospitals. CMS would also implement new statutory exemptions from the distance requirement for qualifying CAHs.
• COVID-era requirements: the rule would remove COVID-19 and influenza data reporting requirements for rural emergency hospitals and long-term care facilities, and eliminate the requirement to offer COVID-19 vaccination to long-term care residents.
• Physical environment: CMS proposes adopting the 2024 editions of the NFPA Life Safety Code and Health Care Facilities Code, plus the 2022 Emergency and Standby Power Systems Code, and permitting additional emergency power sources.

CMS estimates the changes would save roughly $320 million annually across affected entities, per HFMA’s coverage. Comments are open through January 11, 2027.

Our take: administrative burden is a real cost center in every revenue cycle we manage. Requirements that consume staff hours without improving care eventually show up in the cost of billing, compliance, and collections. If finalized, this rule frees up operational capacity – but it will also require updated policies, training plans, and documentation standards during the transition. We will be tracking the comment period and the final rule.

Sources: American Hospital Association, Federal Register, HFMA.